SMSF in retirement
SMSF pension phase: the rules in plain English
By easySMSF, SMSF Specialist Team · Updated
Moving your SMSF into pension phase is the moment your fund stops paying 15% tax on earnings — and starts paying you an income. Here's how it works.
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From accumulation to pension
An SMSF spends most of its life in accumulation phase — earnings are taxed at 15% (10% on long-held capital gains). When a member meets a condition of release, the fund can commence an account-based pension for that member and the assets supporting that pension stop paying tax on earnings entirely.
The catch is the transfer balance cap — currently $1.9 million per member for 2025–26. That's the maximum you can move into pension phase across your lifetime. Anything above stays in accumulation and continues to be taxed at 15%.
Each year the fund must pay you at least the minimum pension amount based on your age (4% under 65, rising to 14% at 95+). easySMSF calculates this for you every July and reports the events to the ATO via TBAR.
- Pension-phase earnings: 0% tax (vs 15% in accumulation)
- Transfer balance cap 2026–27: $2.1m per member
- Minimum pension drawdown: 4–14% depending on age
- Pension events reported to ATO via TBAR within 28 days of quarter end
- Hybrid funds (part accumulation, part pension) are fully supported
Frequently asked questions
General advice warning
Figures shown are illustrative only and based on the inputs and assumptions you provide. They are general information, not personal financial product advice. Consider your objectives, financial situation and needs, and seek personal advice from a licensed financial adviser before acting. easySMSF does not hold an Australian Financial Services Licence (AFSL).